Oil States International, Inc. (OIS): The Best ‘Pick And Shovel’ Stock For The Energy Boom

Both management and analysts expect Oil States International, Inc. (NYSE:OIS) to remain highly profitable. Just how profitable? Since 2010, earnings per share (EPS) has nearly tripled from $3.19 to $8.10, while revenue has doubled to $4.4 billion.

As you might expect, as EPS and revenue have risen, so have share prices:

But because of its size and specialty market niche, I think this company has a lot of room left for growth. The company currently has a market cap of $5 billion, which compares with $41 billion for a more general services provider like Halliburton Company (NYSE:HAL).

The spin-off of the accommodations business into a REIT makes sense for tax reasons. And a leaner, meaner core business will allow Oil States International, Inc. (NYSE:OIS) to focus on what it does best.

Risks to Consider: A downturn in energy prices and a subsequent lack of new exploration could hurt profits. The company is subject to lawsuits in the event of any disasters like the one suffered by Transocean LTD (NYSE:RIG) on its Deepwater Horizon rig in 2010. OIS does not currently pay a dividend, but investors can expect the future REIT spinoff to pay a hefty dividend once the deal is finalized.

Action to Take –> Oil States International is a strong buy after a recent dip in share price from record highs.

P.S. — In his latest Scarcity & Real Wealth advisory, Dave Forest uncovers a unique sector of the commodities market that’s not getting much press — but could lead to enormous gains. To sign up for Dave’s latest issue, click here.

– Chad Tracy

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